Report of the Board of Directors 2018

iLOQ is a Finnish technology company that is rapidly growing and internationalizing. iLOQ is transforming mechanical locking into digital access management.

iLOQ’s technological solutions enable electronic locking without batteries or cables. The company’s products are sold via the iLOQ retail channel, which offers professional installation, servicing, and maintenance services. The company has more than 600 retailers globally. Revenues increased steadily during the 2018 financial period in the oval and DIN lock cylinder markets. Product manufacturing is based on outsourced, flexibly scalable production, with distribution from distribution centers managed by iLOQ. In addition, the company has a small-scale production unit to support its research and development needs.

In line with its growth strategy, iLOQ continued to strengthen its organization in 2018 to support the company’s long-term internationalization and growth targets. The most significant investments were made in strengthening the company’s international sales and marketing, and in research and development. The company’s strategy calls for the international expansion and reinforcement of existing functions, and iLOQ expanded its Central European operations by opening new sales companies in France and Spain. The company’s other national companies are in Sweden, Norway, Denmark, Germany, and the Netherlands.

In May, iLOQ released the iLOQ S50, the world’s first mobile access management solution using NFC technology. The iLOQ S50 is intended for electricity generation and transmission companies, telephone network services, data centers, water treatment plants, real estate services, and transportation services. The iLOQ S50 works without a key using the NFC technology in smartphones, and it operates via a cloud service that enables access rights to be shared securely. The iLOQ S50’s technology is based on the world’s first and only lock cylinder that receives the energy required for opening from a smartphone.

In addition to expanding its network of retailers, the company signed framework agreements with companies including Finland’s leading real estate companies, YIT, SATO, Bonava, Avain Yhtiöt, and the Student Housing Foundation of Northern Finland. Furthermore, several measures have been taken and initiated to raise awareness of iLOQ and boost the brand with the aim of achieving good visibility among the main target groups in Central and Northern Europe, the market areas that are important to the company.

In May 2018, the company announced that it was assessing the possibility of listing its shares on the Nasdaq Helsinki Ltd stock exchange, alongside other alternatives for ensuring the company’s rapid growth and internationalization. This examination will continue in 2019 due to the number of potential alternatives and the time required to make a choice.


For the sixth year in succession, iLOQ generated strongly positive income despite its rapid expansion and substantial investments in internationalization. In the 2018 financial period, iLOQ Group’s revenues were EUR 50.2 million (2017: EUR 40.3 million), an increase of 24.5% year-on-year. The growth in revenues in Central Europe was driven by operations in Germany, leading to
a year-on-year increase of 53.9% to EUR 8.8 (5.7) million. Revenues from operations in Northern Europe amounted to EUR 41.5 (34.6) million, showing year-on-year growth of 19.7%. In Northern Europe, revenues grew fastest in Sweden in euro terms.

The company’s profitability improved by all key measures in the 2018 financial period. Rapid growth improved the gross margin by 23.0% year-on-year to 55.0% (55.7%) of revenue. EBITDA in 2018 was EUR 9.5 million (2017: EUR 10.1 million). The costs for 2018 include a non-recurring charge of EUR 0.8 million for work related to examining the listing of the company’s shares and other strategic alternatives. Taking into consideration the systematic investments in growth in line with the strategy and the costs of the ongoing strategic investigation work, the comparable EBITDA increased 2.1% year-on-year to EUR 10.3 (10.1) million. Comparable EBITDA was 20.5% of revenue (25.0%). At the end of the year, the company had 129 (86) personnel, representing a year-on-year increase of 50.0%. Operating profit (EBIT) amounted to EUR 8.3 (9.1) million, which is 16.5% (22.6%) of revenue. The company’s net profit for the 2018 financial period was EUR 6.5 (7.2) million.


EUR thousand 2018 2017 2016 2015
Revenue 50,249 40,345 33,741 23.063
Revenue growth (%) 24.5 % 19.6 % 46.3 %
Gross margin 27,624 22,454 16,686 10,902
Gross margin (%) 55.0 % 55.7 % 49.5 % 47.3 %
EBITDA 9,463 10,100 6,373 2.679
EBITDA (%) 18.8 % 25.0 % 18.9 % 11.6 %
Comparable EBITDA 10,309 10,100 7,456 2,679
Comparable EBITDA (%) 20.5 % 25.0 % 22.1 % 11.6 %
EBIT 8,284 9,115 5,079 1,784
EBIT (%) 16.5 % 22.7 % 15.1 % 7.7 %
Comparable EBIT 9,130 9,115 6,523 1,784
Comparable EBIT (%) 18.2 % 22.6 % 19.3 % 7.7 %
Investments, tangible and intangible assets 3,301 1,726 923 1,132
Investments (% of revenue) 6.5 % 4.3 % 2.7 % 4.9 %
Solvency ratio (%) 68.6 % 70.4 % 58.2 % 58.3 %
Return on equity (%) 33.4% 43.1 % 38.3 % 17.6 %
Average number of employees 109 78 62 56
Number of employees at the end of period 129 86 67 54


The company has invested in developing new products and improving the features and manufacturing methods of its existing products. The most important development project involved developing the mechanics, electronics, and software for the iLOQ S50 locking system, which was launched in the financial period.

Capitalized investments in tangible and intangible assets in 2018 amounted to EUR 3.3 (1.7) million.


At the end of the 2018 financial period, the company’s liquidity and financial position were good. Cash flow from operations in 2018 totaled EUR 3.8 (7.4) million. Compared with the previous year, the cash flow from operations reflected the investments in business growth and, thereby, also the working capital committed to the business, as well as the supplementary tax paid in relation to the net profit in the previous year.

The consolidated balance sheet total at the end of the review period was EUR 26.5 (29.8) million and the equity ratio was 68.6% (70.4%).


The General Meeting held on March 23, 2018 decided to authorize the Board of Directors to decide on a directed share issue of a maximum of 60,000 class K shares. The Board of Directors is freely entitled to decide on all of the terms and conditions of the directed share issue. The authorization is valid until revoked. On December 31, 2018, the Board of Directors decided on a directed issue of 1,500 shares on the basis of the authorization. Furthermore, the Board of Directors decided during the 2018 financial period to execute a directed issue of a total of 5,300 new class K shares on the basis of the authorization granted by the General Meeting held on March 22, 2017. On December 31, 2018, at the end of the financial period, the authorization granted on March 22, 2017 is no longer valid. The company had a weighty financial reason in accordance with chapter 9, section 4, point 1 of the Limited Liability Companies Act for the directed share issues as they were related to the incentive and commitment scheme for the company’s key personnel.

The subscription price received from the share issues were recognized in the company’s invested unrestricted equity fund.

In 2018, the General Meeting authorized the Board of Directors to decide on an option program permitting a maximum of 60,000 new class K shares in the company to be subscribed. The Board of Directors is freely entitled to decide on all of the terms and conditions of the option program.

The company has a weighty reason for this decision because the option program is intended to commit the company’s key personnel to new roles. The authorization is valid until revoked, and it superseded the option authorization granted on June 30, 2016. On December 20, 2018, the Board of Directors decided on a new option program, which will offer a maximum of 20,000 options for subscription. The option rights entitle their holders to subscribe to a total maximum of 20,000 new class K shares or class K treasury shares. The share subscription period is from May 1, 2021 to December 31, 2026.

In 2018, the General Meeting decided to launch an option program for members of the parent company’s Board of Directors. According to the terms of the options program, options were issued without charge to members of the Board of Directors, each of whom could receive a maximum of 500 options. The options program is a means of committing the members of the Board of Directors to the company and, therefore, there is a sound financial justification on the part of the company. The option rights entitle their holders to subscribe to a total maximum of 3,000 class K shares in the company.


The company has granted related-party loans at market rates to commit its key personnel to the company in relation to its share-based incentive scheme. On December 31, 2018, the total amount in loans was EUR 2,980,000.00. The term of the loan is 10 years and the interest rate is the 12-month Euribor rate plus 1.5%. The guarantees for the loans are the shares that were subscribed by key personnel using the loans.


No material changes have occurred in the company’s operations or financial position since the end of the financial period.


The company’s management forecasts a growth in revenues in the current market areas thanks to development measures to accelerate growth in 2019. Profitability is forecast to remain good despite the investments in growth.


The company operates a network business model to manufacture and distribute its products.
Efforts are made to prevent risks related to business operations by identifying the risks in advance. In 2018, special attention was paid to ensuring the availability of components in order to safeguard the company’s ability to supply its products.

Due to the nature of the operations of the company’s security products, efforts are made to prevent product-related risks through thorough product testing, both internally and by external testing institutions, and through high-quality operations at every stage of research, development, and manufacturing.

The above-mentioned and other business risks are also covered by insurance policies, in addition to the development of operational processes. The Board of Directors is not aware of any legal action or risks related to credit losses as could materially affect the company’s profitability.


The company has a certified ISO 9001:2015 quality management system and a certified ISO 14001:2015 environmental management system. The company’s iLOQ S10/S50 SaaS service is provided by Fujitsu Services Oy, which holds ISO 27001:2013 certification for its information security management system.


The company’s share capital is distributed as follows:

2018 2017
Class K shares 1,238,744 1,220,124
Class A shares 0 0

All shares carry an equal right to dividends and company assets. Both series of shares are subject to the redemption clause of the Articles of Association.


The Group held no treasury shares on December 31, 2018.


On December 31, 2018, iLOQ Ltd had distributable equity of

EUR 13,140,165.20, including the profit for the financial period of EUR 6,507,602.91. The company’s distributable funds are divided between the invested unrestricted equity fund, which contains EUR 5,151,132.20, and retained earnings, which contains EUR 12,420,781.49. Capitalized development expenditure reduces the amount of distributable assets by a total of EUR 4,431,685.49.

The Board of Directors proposes to the General Meeting that a dividend of EUR 2.00 be paid for the 2018 period for each class K share in circulation.

Since the end of the financial period, no material changes have occurred in the company’s financial position. The company’s liquidity is good, and it is the opinion of the Board of Directors that the proposed distribution of profit and refund of capital will not compromise the company’s solvency.


The company’s auditor was KPMG Oy Ab, a firm of auditors, with Tapio Raappana, Authorized Public Accountant, as the principal auditor.